In this week’s Business News: industrial production surges; Internet sales grow steadily but growth slowdown seen in 2011; commercial property market picks up; US company signals multi-billion crown arbitration case; and betting company tips solar power companies in fight with state.
The latest figures for industrial production and the trade balance show the Czech economy faring fairly well. Industrial production in November soared by 15.9 percent year on year, far exceeding expectations. The prospects also appear positive looking forward with new orders for firms up 14.2 percent. Trade figures for November also showed a surplus of 11.8 billion crowns. Exports climbed by 21 percent over the month but were outpaced by a 24.1 percent rise in imports. Since January, imports have been growing faster than exports with the trade surplus being cut by around a sixth as a result to stand at just over 122 billion crowns after 11 months.
Sales over the Internet in the Czech Republic grew by almost a quarter last year, keeping pace with the advance over the last three years. Online sales shot up in 2010 by 22 percent, just short of the 23 percent rise in 2009, according to business grouping, the Association for Electronic Commerce. But the group predicts tougher times this year with the market growing by just 15 percent as Czech households become wary of spending amid pay freezes and worries about jobs. Overall, Internet sales have more than trebled in five years to total 33 billion crowns last year.
The Czech commercial property market picked up in 2010 with transactions worth 16.5 billion crowns according to international consultants King Sturge. That is a 17 percent rise on the previous year. Czechs and Slovaks dominated the local market for the second year running, accounting for 71 percent of purchases. The biggest player on the market was billionaire Czech property magnate Radovan Vítek whose Czech Property Investments group splurged out nearly 10 billion crowns in purchases last year. The real estate consultants see real estate transactions at around the same level this year.
Another company is squaring up to launch an international arbitration proceeding against the Czech Republic for failing to adequately protect its interests. US-based investment and business firm Washington Investment Company is seeking damages for a claimed 12 billion crown, just over 630 million US dollars, loss of profit. The claims are believed to be linked to a contract with the state forestry firm, Lesy ČR. Washington Investment is also believed to have another claim in the wings. Under the procedures for such cases, the claimant has six months from first notifying a dispute to proceed towards a full blown arbitration.
The Czech state has a very patchy record in winning international arbitration cases, according to some rankings it has the second worst record for losing such cases worldwide. Perhaps with that in mind, a local betting company has offered long odds on the government winning the first of an expected raft of cases expected to be launched by solar power companies in the coming months. Tipsport is offering the long odds of 3.6:1 on the Czech state winning the first solar arbitration. Much shorter odds of 1.2:1 are offered on a win for angry investors. The investors say the government broke agreements in the second half of last year when it clamped down on a solar boom. They are particularly incensed at a new 26 percent tax slapped on solar power producers
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